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Cbank pledges steady 9pct depositing rate until year-end
The State Bank of Vietnam has pledged to maintain a 9 percent depositing rate for one-year term deposits from now to the end of the year.
The pledge was given after the central bank announced thelending and depositing rate reduction starting Monday.
It coincided with the speech given by SBV governor Nguyen Van Binh at a recent meeting session of the National Assembly, stating that this will be the last rate cut for 2012.
This is the fourth time in nearly three months that the SBV has cut the depositing rates, with a total reduction of up to 5 percent.
The current interest rate mechanisms have ensured a balance between the interests of depositors and borrowers, in the context that inflation tends to be lower, SBV deputy governor Le Minh Hung told newswireVnexpress.
Since the central bank will keep the interest rates stable until the end of the year, businesses will be more proactive in mapping out their business plans, Hung said.
As a result, there will be no financial shocks to the business sector, and the central bank can prevent forex speculators from hedging on the forex rate fluctuations, he added.
According to Hung, the current interest rate is appropriate regarding the world economic situation, notably the shrinking global demand, which will have an adverse impact on export-led economies like Vietnam.
Therefore, the operating activities of the SBV must be balanced between soaring local production and ensuring compliance with the inflation target, which is expected to be 7-8 percent this year.
With such an inflation forecast, the current depositing rate will ensure positive real interest rates for depositors. In addition, the State Bank is committed to not devaluing the dong by over 3 percent this year.
Interbank interest rates surge
The interbank interest rates have begun to pick up right after the deposit interest rate cap was lowered to 9 percent per year, from Monday (June 11, 2012),according to newswire Vneconomy.
The interest rates in the interbank market on the date of the implementation of the new deposit interest rate cap of 9 percent per year, and 1 percent reduction on other key rates, soared sharply in many terms.
Specifically, many transactions showed that the overnight interest rate was 3 percent per year, up from 1.5 percent per year last weekend; one week terms were at 3.5 percent per year, up from 1.5 percent per year; and one month terms were 5-5.5 percent per year, up from 4-4.5 percent per year, according to Reuters.
At the same time, on June 11, the State Bank of Vietnam (SBV) also lowered the interest rate on open market operations (OMO) to 10 percent per year, the lowest since January 5, 2011.
Currently, the interest rates on OMO no longer attract the attention of the market, as OMO transactions have very small value and, oftentimes there are no transactions for many days.
Also on OMO, the central bank maintained its issuing of treasury-bills for tenors of 28-days, 91-days and 182-days, with value of three trillion dong per week.
The current value of these T-bills has reached over VND70 trillion, and they have not matured yet. This amount of money will return to commercial banks in the next several months, according to Reuters’ data.
Further rate cut?
The Hong Kong and Shang Hai Banking Limited Group (HSBC) has said in a recently released report that with easing inflation pressure, the central bank will further cut interest rates by 2 percent in the coming months.
Meanwhile Le Anh Tuan, research director of Dragon Capital, told Vneconomy that : "I do not exclude the possibility that Vietnam will have to reduce interest rates by around 2-3 percentage points from now to the year-end"
In the May report sent to investors which was announced by Bao Viet Securities Co (BVSC) today, the company has also forecast that the SBV may have to cut rates once more in the remaining months of 2012
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